Cost of Employee Financial Stress

Geoff Currier

Stress. We all feel it. In fact, we need a certain measure of it in order to perform well. But, what happens when that stress becomes unhealthy?  It can manifest itself in the workplace from distracted or lacklustre work to some employees taking stress leave. The costs to an employer can add up rapidly. For tax and financial advisors, understanding the root causes and financial implications of client stress is critical. It’s not just a personal issue; it’s a business issue—and one where your expertise can make a measurable difference.

Financial worries can be the greatest source of stress for many workers and that stress can reduce a person’s productivity. Emotional and mental stress can lead to illness and contribute to absenteeism. In certain professions it can create safety issues in the workplace.

It’s not a simple matter to quantify the dollar cost to a business but the Financial Consumer Agency of Canada (FCAC) has crafted a formula to give us an idea of the impact of employee financial stress on a company.

 43% of the people surveyed admitted they lost work time due to worries over personal finances. The report estimates that these workers lost approximately 3.5 hours per week stressing over money instead of performing their tasks.

FCAC estimates that when a worker is under financial strain, it costs the company $1,000 a year in lost productivity. This research points out that a company with 100 employees could be losing more than $200,000 a year.

These numbers speak to the larger picture of employee stress over their personal finances. There are many possible reasons why a person is under financial strain. They may be earning a low wage which makes making ends meet a challenge. They may be encountering unexpected expenses for which they were unprepared. 

The arrival of a new baby, a divorce or any number of other life changing events can wreak havoc with a personal bank balance. As tax advisors you need to be on top of any major changes in your clients’ lives.

Some may have mismanaged their finances and find themselves overwhelmed. As tax experts you are in a position to assist your clients. 

If, for example, the source of their stress is money owed to CRA, you can be of great help in guiding them through the process of eliminating that debt and the penalties that may have come with late payments. Regular phone calls or emails from CRA can weigh heavily and your clients who owe CRA back taxes and/or penalties will need a steady hand.

If your client is dealing with consumer debt, you might still be able to offer some advice for how to get out of that financial bind. Consumer debt and money owed to CRA can be both financially and emotionally crushing. You are able to calm the waters and give them some sound financial advice. 

If helping your client with their budget is outside of your comfort zone you can still be of service by directing them to any number of qualified debt counselling services. 

Employers should be aware of the cost of financial stress on their employees. If a worker is not performing up to the expected level, a conversation could provide some insight. Supervisors might want to explore the reasons why someone’s productivity has tapered off. 

There is also the option of the employee approaching the boss to explain the situation. This may be difficult for most people, but it could lead to a solution. Many employers will be sympathetic to the troubles of a valuable employee and may offer some assistance in resolving the financial stress. It’s in the company’s best interest to have its workers performing at their peak.

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